Bernanke: Fed undecided on action

Democrats and Republicans at a hearing of the Joint Economic Committee repeatedly pumped Bernanke for a preview of future action on stimulating the economy — with Wall Street hanging on his every word. But the Federal Reserve chairman was adamant that nothing has been decided.

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“My colleagues and I are still working on our own assessments,” Bernanke said.

Bernanke said they were weighing whether disappointing job numbers in April and May were a seasonal blip or the start of an economic slowdown that could require outside action to break.

Politicians and investors alike will get their answer following the Federal Reserve’s June 19 and 20 meeting, where Bernanke and his team will determine what immediate attempts at stimulus — if any — they’ll make.

The lead option under consideration is “quantitative easing,” a monetary maneuver in which the Federal Reserve buys bonds in bulk in an effort to keep interest rates low.

By pushing the low rates, the Federal Reserve hopes to nudge private investors toward the stock market and other investment that — while riskier than bonds — are more likely to stimulate economic growth. The bond buys are also intended further lower mortgage rates, encouraging new home purchases or helping struggling owners to refinance.

There are questions about how much help additional easing would provide, since interest rates on Treasury bonds and mortgages are already at historic lows and haven’t generated a strong rebound.

The Dow Jones industrial is up nearly 100 points Thursday, but fell from sharply from a morning peak immediately following Bernanke’s remarks.

Republicans are looking for Bernanke to steer clear of economic meddling and Democrats are pleading for action. But with Bernanke refusing to take sides, members of both parties retreated to their corners.

“The Fed has done all that it can do — and perhaps done too much,” Committee vice-chairman Kevin Brady (R-Texas) told Bernanke, insisting that new attempts at stimulus would succeed only in producing inflation.